Cost-conscious office tenants in the Tri-Cities are scouting new locations up to two years before their leases expire and getting favorable renewal offers with handsome concessions. All this added up to a strong quarter for Glendale, particularly at the expense of its two sister cities.
While vacancy rates rose in Pasadena and Burbank, the long-weak Glendale market saw its vacancy rate fall more than a point to 23.5 percent since the start of the year. Some 73,000 square feet of space was absorbed by Glendale, while the other two cities each gave back nearly 100,000 square feet, according to Jones Lang LaSalle Inc.
Glendale’s absorption was the highest quarterly figure in the past three years, said Bill Boyd, senior managing director at Charles Dunn Co. If activity continues, it could recall the heyday of the 1980s and early 1990s when Glendale was absorbing an average of 300,000 square feet a year, he said.
Much of the movement is coming at the expense of Pasadena, where asking rents decreased by a penny in the quarter but are still up seven cents from a year ago, despite increased vacancies. “It’s a very peculiar situation in Pasadena, where they are losing tenants but increasing rents,” Boyd said.
Two Glendale properties that MPG Office Trust Inc. of Los Angeles let fall into foreclosure last year have sparked considerable interest. The buildings, at 801 N. Brand Blvd. and 700 N. Central Ave., are now owned by LNR Property LLC of Miami, which is marketing them aggressively.
“They have capital to spend on improvements and they are interested in doing deals,” said Shaun Stiles, executive vice president at Jones Lang LaSalle.
While no deals have been inked, several market sources say New York Life Insurance Co. is negotiating to move its 301 N. Lake Ave. offices in Pasadena to two floors in the 801 N. Brand building. That would involve more than 40,000 square feet and another big loss for Pasadena, which saw law firm Christie Parker & Hale move to 42,000 square feet in Glendale last quarter. The availability of building-top signage is one of the major carrots for the Brand property.
“Employers are starting to realize that Glendale is not that far distancewise for employees to travel. And the pricing is so good, ” Stiles said.
Meanwhile, despite its lackluster first quarter, Burbank remains a top destination for entertainment and media firms looking for proximity to the major studios. The Pointe, 2900 W. Alameda Ave., next to NBC studios attracted several new tenants.
Public television station KCET-TV (28) has completed build-out of its TV studios at the Pointe, 2900 W. Alameda Ave., in Burbank. It plans to move from Hollywood this month. Fidelity Investments also took occupancy in the 500,000-square-foot building, which was built in 2009 and still has top-floor vacancies.
Pacific Urban Residential, a private investment firm, sold an 84-unit apartment Pasadena complex, at 385 S. Catalina Ave., to AvalonBay Communities Inc., a publicly traded real estate investment trust. The $19.4 million price breaks down to $231,000 per unit. The complex, built in 1973 and updated in 2006, will be renovated this year.
Santa Monica developer New Urban West Inc. has agreed to sell its five-acre property in Burbank’s Rancho Equestrian Neighborhood to Lycee International de Los Angeles, which plans to open a private school there. New Urban West purchased the parcel, a former General Motors training center at 1105 W. Riverside Drive, in 2009 and planned to put in a 120-unit housing development. Neighborhood residents scuttled the plan, complaining it would increase congestion.
Western Asset Management Co. has renewed its lease on 194,000 square feet at 385 E. Colorado Blvd. in Pasadena for 11 years. The 250,000-square-foot building is known as Western Asset Plaza because the fixed-income management firm leased three-quarters of it before it was constructed.
Financial services firm Morgan Stanley renewed its lease at 55 S. Lake Ave. in the Pasadena Towers building for five years. The 10,000-square-foot space is the second Pasadena office housing the firm.
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